CROWN CRAFTS INC

Crown Crafts, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note1 – Description of Business

Crown Crafts, Inc. (the “Company”) was originally formed as a Georgia corporation in1957 and was reincorporated as a Delaware corporation in2003. The Company operates indirectly throughtwo wholly-owned subsidiaries, NoJo Baby & Kids, Inc. (“NoJo”) and Sassy Baby, Inc. (“Sassy”), in the infant, toddler and juvenile products segment within the consumer products industry. The infant, toddler and juvenile products segment consists of infant and toddler bedding, diaper bags, bibs, plush, dolls, disposables, toys and feeding products. Most sales of the Company’s products are generally made directly to retailers, such as mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, wholesale clubs and internet-based retailers. The Company’s products are marketed under a variety of Company-owned trademarks, under trademarks licensed from others and as private label goods.

The Company's fiscal year ends on the Sunday nearest to or on* March 31.References herein to “fiscal year2026”* or*“2026”* represent the52-week period ended* March 29, 2026,and references herein to “fiscal year2025”* or*“2025”* represent the52-week period ended* March 30, 2025.*

Note2 - Summary of Significant Accounting Policies

**Basis of Presentation: The accompanying consolidated financial statements include the accounts of the Company and have been prepared pursuant to accounting principles generally accepted in the U.S. (“GAAP”) as promulgated by the Financial Accounting Standards Board (“FASB”).

**Use of Estimates: The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated balance sheets and the reported amounts of revenues and expenses during the periods presented on the consolidated statements of operations and cash flows. Significant estimates are made in relation to allowances related to accounts receivable for expected credit losses and for customer deductions for returns, allowances and disputes; inventory reserves for discontinued finished goods; and a reserve for unrecognized tax liabilities in respect of the tax impact of state apportionment percentages. Actual results could differ materially from these estimates.

**Cash and Cash Equivalents:The Company’s credit facility consists of a revolving line of credit under a financing agreement with The CIT Group/Commercial Services (“CIT”). The Company classifies a negative balance outstanding under this revolving line of credit as cash and cash equivalents, as these amounts are legally owed to the Company and are immediately available to be drawn upon by the Company. There areno compensating balance requirements or other restrictions on the transfer of amounts associated with the Company’s depository accounts.

**Financial Instruments: For short-term instruments such as cash and cash equivalents, accounts receivable and accounts payable, the Company uses carrying value as a reasonable estimate of fair value. Additionally, the Company’s long-term debt is a revolving credit facility whereby the Company uses carrying value as a reasonable estimate of fair value.

Segments and Related Information: The Company operates primarily inone principal segment, infant, toddler and juvenile products. These products consist of infant and toddler bedding, bibs, toys, plush, dolls, diaper bags, disposables and feeding products. Net sales of bedding, diaper bags and net sales of bibs, toys and disposable products for the fiscal years ended* March 29, 2026and March 30, 2025*are as follows (in thousands):

Revenue Recognition: Revenue is recognized upon the satisfaction of all contractual performance obligations and the transfer of control of the products sold to the customer. The majority of the Company’s sales consists of single performance obligation arrangements for which the transaction price for a given product sold is equivalent to the price quoted for the product, net of any stated discounts applicable at a point in time. Each sales transaction results in an implicit contract with the customer to deliver a product as directed by the customer. Shipping and handling costs that are charged to customers are included in net sales, and the Company’s costs associated with shipping and handling activities are included in cost of products sold.

F-7

Revenue from sales made directly to consumers is recorded when the shipped products have been received by customers and excludes sales taxes collected on behalf of governmental entities. Revenue from sales made to retailers is recorded when legal title has been passed to the customer based upon the terms of the customer’s purchase order, the Company’s sales invoice, or other associated relevant documents. Such terms usually stipulate that legal title will pass when the shipped products areno longer under the control of the Company, such as when the products are picked up at the Company’s facility by the customer or by a common carrier. Payment terms can vary from prepayment for sales made directly to consumers to payment due in arrears (generally,60 days of being invoiced) for sales made to retailers.

Allowances Against Accounts Receivable: The Company estimates certain allowances from revenues recognized through sales made to its customers. These allowances include anticipated returns and claims, expected credit losses, chargebacks related to negotiated customer terms and discounts, cooperative advertising allowances, warehouse allowances, placement fees, volume rebates, coupons, discounts and other allowances.

The allowance for anticipated returns and claims is estimated based upon the Company’s historical experience with actual returns and claims, combined with the consideration of events that could result in a change from historical rates on a per-customer basis. The allowance for anticipated returns and claims is recorded as a reduction of net sales in the reporting period within which the related sales are recorded.

To reduce the Company’s exposure to expected credit losses, and to enhance the predictability of its cash flows, the Company assigns the majority of its receivables under factoring agreements with CIT. In the event that a factored receivable becomes uncollectible due to creditworthiness, CIT bears the risk of loss. With respect to the receivables that arenot assigned under factoring agreements with CIT, the Company addresses this credit risk by establishing an allowance that is intended to represent the Company’s best estimate of the expected credit losses for such receivables. In the development of this estimate, the Company makes a number of judgements utilizing the Current Expected Credit Losses methodology, which requires the Company to estimate lifetime expected credit losses by specifically analyzing the receivables. This analysis incorporates an aging of the receivables, relevant payment history and historical loss experience, as well as the consideration of customer concentrations, customer creditworthiness, negotiated changes to the payment terms of customers, recent economic trends, and expectations regarding economic conditions over a reasonable and supportable future period. The allowance for expected credit losses is included in marketing and administrative expenses in the accompanying consolidated statements of operations.

The allowance for chargebacks related to cooperative advertising, warehouse allowances, placement fees, volume rebates, coupons, discounts and other allowances is recorded commensurate with sales activity or using the straight-line method, as appropriate. The majority of the Company’s allowances for such chargebacks occurs on a per-invoice basis. When a customer requests to have an agreed-upon deduction applied against the customer’s outstanding balance due to the Company, the allowances are correspondingly reduced to reflect such payments or credits issued against the customer’s account balance. The Company analyzes the components of the allowances for customer chargebacks monthly and adjusts the allowances to appropriate levels. Since allowances associated with cooperative advertising are accrued commensurate with sales activity or using the straight-line method, as appropriate, the timing of funding requests for cooperative advertising* mayresult in fluctuations in the allowance from period to period, although such timing shouldnot* have a material impact on the consolidated statements of operations. The allowance for cooperative advertising is included in marketing and administrative expenses in the consolidated statements of operations. All other allowances for chargebacks related to warehouse allowances, placement fees, volume rebates, coupons and discounts are recorded as a reduction of net sales in the reporting period within which the related sales are recorded.

The Company’s actual experience associated with its allowances against accounts receivable in a future period* maydiffer from the judgements, estimates, analysis and considerations employed in the development of these allowances. Thus, the Company’s allowances against accounts receivable at any point in time may*be over-funded or under-funded.

Credit Concentration: The Company’s accounts receivable at March 29, 2026amounted to $18.9 million, net of allowances of $1.5 million. Of this amount, $16.3 million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring agreements. The Company’s accounts receivable at* March 30, 2025*amounted to $24.5 million, net of allowances of $1.7 million. Of this amount, $21.9 million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could have incurred if CIT had failed completely to perform its obligations under the factoring agreements.

Inventory Valuation: The preparation of the Company's financial statements requires careful determination of the appropriate value of the Company's inventory balances. Such amounts are presented as a current asset in the accompanying consolidated balance sheets and are a direct determinant of cost of products sold in the accompanying consolidated statements of operations and, therefore, have a significant impact on the amount of net income reported in the accounting periods. The basis of accounting for inventories is cost, which includes the direct supplier acquisition cost, duties, taxes and freight, and the indirect costs to design, develop, source and store the product until it is sold. Once cost has been determined, the Company’s inventory is then stated at the lower of cost or net realizable value, with cost determined using thefirst-in,first-out method, which assumes that inventory quantities are sold in the order in which they are acquired.

F-8

The determination of the indirect charges and their allocation to the Company’s finished goods inventories requires management judgment and estimates. If management made different judgments or utilized different estimates, then differences would result in the valuation of the Company’s inventories and in the amount and timing of the Company’s cost of products sold and the resulting net income for the reporting period.

On a periodic basis, management reviews its inventory quantities on hand for obsolescence, physical deterioration, changes in price levels and the existence of quantities on hand which* maynot* reasonably be expected to be sold within the Company’s normal operating cycle. To the extent that any of these conditions is believed to exist or the market value of the inventory expected to be realized in the ordinary course of business is otherwiseno longer as great as its carrying value, an allowance against the inventory value is established. To the extent that this allowance is established or increased during an accounting period, an expense is recorded in cost of products sold in the Company’s consolidated statements of operations. Only when inventory for which an allowance has been established is later sold or is otherwise disposed is the allowance reduced accordingly. Significant management judgment is required in determining the amount and adequacy of this allowance. In the event that actual results differ from management’s estimates or these estimates and judgments are revised in future periods, the Company* maynot* fully realize the carrying value of its inventory or* may*need to establish additional allowances, either of which could materially impact the Company’s financial position and results of operations.

Leases:The Company capitalizes most of its operating lease obligations as right-of-use assets and recognizes corresponding lease liabilities. The Company elects to use the practical expedient that permits the Company to exclude short-term agreements of less than12 months from capitalization. The Company is a party to various operating leases for offices, warehousing facilities and certain office equipment. The leases expire on various dates, have varying options to renew and cancel, and maycontain escalation provisions. The Company recognizes as expense non-variable lease payments ratably over the lease term. The key estimates for the Company’s leases include the discount rate used to discount the unpaid lease payment to present value and the lease term. The Company’s leases generally donot include a readily determinable implicit rate; therefore, management determined the incremental borrowing rate to discount the lease payment based on the information available at lease commencement. For purposes of such estimates, a lease term includes the noncancellable period under the applicable lease.

**Depreciation and Amortization: The accompanying consolidated balance sheets reflect property, plant and equipment, and certain intangible assets at cost less accumulated depreciation or amortization. The Company capitalizes additions and improvements and expenses maintenance and repairs as incurred. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets, which arethree toeight years for property, plant and equipment, andfive totwenty years for intangible assets other than goodwill. The Company amortizes improvements to its leased facilities over the term of the lease or the estimated useful life of the asset, whichever is shorter.

**Patent Costs: The Company incurs certain legal and related costs in connection with patent applications. The Company capitalizes such costs to be amortized over the expected life of the patent to the extent that an economic benefit is anticipated from the resulting patent or an alternative future use is available to the Company. The Company also capitalizes legal and other costs incurred in the protection or defense of the Company’s patents when it is believed that the future economic benefit of the patent will be maintained or increased and a successful defense is probable. Capitalized patent defense costs are amortized over the remaining expected life of the related patent. The Company’s evaluation of future economic benefit of its patents involves considerable management judgment, and a different conclusion could result in a material impairment charge up to the carrying value of these assets.

Valuation of Long-Lived Assets and Identifiable Intangible Assets:In addition to the depreciation and amortization procedures set forth above, the Company reviews for impairment long-lived asset groups and certain identifiable intangible asset groups whenever events or changes in circumstances indicate that the carrying amount of any asset group maynot be recoverable. In the event of an impairment, the asset is written down to its fair value.

Goodwill: Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired in business combinations. For the purpose of presenting and measuring for the impairment of goodwill, the Company hastwo reporting units:one that produces and markets infant and toddler bedding and diaper bags and another that produces and markets infant and toddler bibs, toys and disposables. The Company fully impaired its goodwill during the year ended March 30, 2025.**

*Royalty Payments:The Company has entered into agreements that provide for royalty payments based on a percentage of sales with certain minimum guaranteed amounts. These royalty amounts are accrued based upon historical sales rates adjusted for current sales trends by customers. Royalty expense is included in cost of products sold in the accompanying consolidated statements of operations and amounted to $6.5 million and $6.7 million for the fiscal years ended March 29, 2026and March 30, 2025,*respectively.

F-9

Provision for Income Taxes: The Company’s provision for income taxes includes all currently payable federal, state, local and foreign taxes and is based upon the Company’s effective tax rate, which is based on the Company’s pre-tax income, as adjusted for certain expenses within the consolidated statements of operations that will never be deductible on the Company’s tax returns and certain charges expected to be deducted on the Company’s tax returns that will never be deducted on the consolidated statements of operations, multiplied by the statutory tax rates for the various jurisdictions in which the Company operates and reduced by certain anticipated tax credits. The Company files income tax returns in the many jurisdictions in which it operates, including the U.S., several U.S. states and the People’s Republic of China. The statute of limitations varies by jurisdiction; taxable years open to examination as of* March 29, 2026were the fiscal years ended March 29, 2026,** March 30, 2025,** March 31, 2024,** April 2, 2023,** April 3, 2022,and March 28, 2021.*

Management evaluates items of income, deductions and credits reported on the Company’s various federal and state income tax returns filed and recognizes the effect of positions taken on those income tax returns only if those positions are more likely thannot to be sustained. The Company applies the provisions of accounting guidelines that require a minimum recognition threshold that a tax benefit must meet before being recognized in the financial statements. Recognized income tax positions are measured at the largest amount that has a greater than50% likelihood of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. After considering all relevant information regarding the calculation of the state portion of its income tax provision, the Company believes that the technical merits of the tax position that the Company has taken with respect to state apportionment percentages would more likely thannot be sustained. However, the Company also realizes that the ultimate resolution of such tax position could result in a tax charge that is more than the amount realized based upon the application of the tax position taken. Therefore, the Company’s measurement regarding the potential tax impact of revised state apportionment percentages resulted in the Company recording a discrete reserve for unrecognized tax liabilities during fiscal year2025 of $22 thousand in the accompanying consolidated statements of operations. The Company didnot record a discrete reserve during fiscal year2026 because the measurement of the potential tax impact wasnot a material amount.

The Company’s policy is to accrue interest expense and penalties as appropriate on any estimated unrecognized tax liabilities as a charge to interest expense in the Company’s consolidated statements of operations. During the fiscal years ended* March 29, 2026and March 30, 2025,*the Company accrued $28 thousand and $81 thousand, respectively, for interest expense and penalties on the portion of the unrecognized tax liabilities for which the relevant statute of limitations remained unexpired.

Although management believes that the calculations and positions taken on its filed income tax returns are reasonable and justifiable, the outcome of an examination could result in an adjustment to the position that the Company took on such income tax returns. Such adjustment could also lead to adjustments toone or more other state income tax returns, or to income tax returns for subsequent fiscal years, or both. To the extent that the Company’s reserve for unrecognized tax liabilities isnot adequate to support the cumulative effect of such adjustments, the Company could experience a material adverse impact on its future results of operations. Conversely, to the extent that the calculations and positions taken by the Company on the filed income tax returns under examination are sustained, the reversal of all or a portion of the Company’s reserve for unrecognized tax liabilities could result in a favorable impact on its future results of operations.

Advertising Costs: The Company’s advertising costs are primarily associated with cooperative advertising arrangements with certain of the Company’s customers and are recognized using the straight-line method based upon aggregate annual estimated amounts for these customers, with periodic adjustments to the actual amounts of authorized agreements. Advertising expense is included in marketing and administrative expenses in the consolidated statements of operations and amounted to $1.4 million and $914 thousand for the fiscal years ended March 29, 2026and* March 30, 2025,*respectively.

Business Combinations: The Company accounts for acquisitions using the acquisition method of accounting in accordance with FASB ASC Topic805, Business Combinations. An acquisition is accounted for as a purchase and the appropriate account balances and operating activities are recorded in the Company’s consolidated financial statements as of the acquisition date and thereafter. Assets acquired, liabilities assumed and noncontrolling interests, if any, are measured at fair value as of the acquisition date using the appropriate valuation method. The Company* mayengage an independentthird* party to assist with these measurements. Goodwill resulting from an acquisition is recognized for the excess of the purchase price over the fair value of the tangible and identifiable intangible assets, less the liabilities assumed.

*Earnings (Loss) Per Share: The Company calculates basic earnings (loss) per share by using a weighted average of the number of shares outstanding during the reporting periods. Diluted shares outstanding are calculated in accordance with the treasury stock method, which assumes that the proceeds from the exercise of all exercisable options would be used to repurchase shares at market value. The net number of shares issued after the exercise proceeds are exhausted represents the potentially dilutive effect of the exercisable options, which are added to basic shares to arrive at diluted shares. Due to the net loss incurred by the Company for the period ended March 29, 2025,*diluted shares used in the calculation of the diluted loss per share represented basic shares because the inclusion of the potentially dilutive effect of the exercisable stock options would have resulted in anti-dilution.

F-10

Recently-Issued Accounting Standards:In December 2023,the FASB issued ASUNo. 2023-09, Income Taxes (Topic740*)– Improvements to Income Tax Disclosures*, the objective of which is to enhance the transparency and decision usefulness of income tax disclosures. The ASU requires disaggregated information about the Company’s effective income tax rate reconciliation as well as on income taxes paid. The ASU was required to be adopted for fiscal years beginning after* December 15, 2024and early adoption was permitted. The Company adopted ASUNo.* 2023-09 effective for the fiscal year ended* March 29, 2026and the income tax disclosures in Note12* reflect that adoption.

In* November 2024,the FASB issued ASUNo.* 2024-03, Income Statement–* Reporting Comprehensive*–* Expense Disaggregation Disclosures (Subtopic220-40)– Disaggregation of Income Statement Expenses,the objective of which is to enhance the transparency and usefulness of financial statements by requiring public entities to provide more detailed disclosures about their expenses. The amendments in ASUNo.* 2024-03 are required to be adopted for annual reporting periods beginning after* December 15, 2026,and for interim periods within annual reporting periods beginning after December 15, 2027,and early adoption is permitted. The Company is evaluating the guidance of the ASUNo.* 2024-03 against its existing disclosures related to income statement expenses.

The Company has determined that all other ASUs issued which had become effective as of* March 29, 2026,or which will become effective at some future date, arenot* expected to have a material impact on the Company’s consolidated financial statements.

Note3 – Segment Reporting

The Company’s operations are managed and reported to its Chief Executive Officer, the Company’s chief operating decision maker (“CODM”), on a consolidated basis. The Company operates inone principal segment, infant, toddler and juvenile products. These products consist of infant and toddler bedding, diaper bags, bibs, plush, dolls, disposables, toys and feeding products. The CODM assesses performance and allocates resources based on the Company’s consolidated statements of operations, which requires the CODM to manage and evaluate the results of the Company in a consolidated manner to drive efficiencies and develop uniform strategies. Segment asset information isnot used by the CODM to allocate resources.

As a single reportable segment entity, the Company’s segment performance measure is net income. The following table presents information about the Company’s reportable segment (in thousands):

Included in the profit or loss measure above are the following for the fiscal year ended* March 29, 2026,depreciation and amortization expenses were $752 thousand and $774 thousand, respectively, while for the fiscal year ended March 30, 2025,*depreciation expense was $704 thousand and amortization expense, including $13.8 million of goodwill impairment, totaled $14.5 million.

Note4 – Major Customers and Concentrations

Product Sourcing: Foreign and domestic contract manufacturers produce most of the Company’s products, with the largest concentration being in China. The Company makes sourcing decisions on the basis of quality, timeliness of delivery and price, including the impact of ocean freight and duties. Although the Company maintains relationships with a limited number of suppliers, the Company believes that its products* may*be readily manufactured by several alternative sources in quantities sufficient to meet the Company’s requirements.

F-11

For the year ended* March 29, 2026,purchases from the Company’stwo largest suppliers accounted for approximately 16% and 10% of purchases. To mitigate the risks associated with supplier concentration, the Company engages in ongoing efforts to identify alternative sources of supply, assess supplier reliability and performance, and negotiate favorable contractual terms where feasible. However, there isno* assurance that the Company will be successful in reducing its dependence on any single supplier or mitigating the impact of supplier-related risks in the future.

The Company maintains foreign representative offices located in Shanghai and Shenzhen, China, which are responsible for the coordination of production, purchases and shipments, seeking out new vendors and overseeing inspections for social compliance and quality. The Company’s management and quality assurance personnel visit thethird-party facilities regularly to monitor and audit product quality and to ensure compliance with labor requirements and social and environmental standards. In addition, the Company closely monitors the currency exchange rate. The impact of future fluctuations in the exchange rate or changes in safeguards cannot be predicted with certainty.

The U.S. government has tariffs on imports from certain countries, including China. During2025, the U.S. government increased tariffs which increased the cost of the products the Company sources from China and affected shipments from the Company’s Chinese-based suppliers. Certain of these tariffs, the IEEPA tariffs, were recently deemed illegal by the U.S. Supreme Court ruling issued on* February 20, 2026.The Company incurred approximately $5.3 million and $267 thousand of IEEPA tariffs during fiscal year2026* and2025, respectively. In* April 2026,the U.S. Customs and Border Protection launched the Consolidated Administration and Processing of Entries (“CAPE”), a platform for importers of record to submit IEEPA tariff refund requests. The Company has evaluated its eligibility to submit IEEPA tariff refund requests, is complying with all applicable refund procedures and has submitted its eligible entries. The Company continues to evaluate the impact of the tariffs, and their potential refunds, on imports from China and on the Company’s business and financial condition. Accordingly, the Company hasnot* recorded a receivable as of* March 29, 2026.The Company will continue to monitor developments and will recognize any recovery when realization becomes probable. As of June 17, 2026,*the Company has received $0.2 million in IEEPA refunds.

The ultimate availability, timing and amount of any potential refunds of such tariffs are highly uncertain and are subject to further legal, regulatory and administrative developments. We continue to monitor these developments and the evolving tariff environment.

Licensed Products:Certain products are manufactured and sold pursuant to licensing agreements for trademarks. Also, many of the designs used by the Company are copyrighted by other parties, including trademark licensors, and are available to the Company through copyright license agreements. The licensing agreements are generally for an initial term ofone tothree years and* mayor may**not* be subject to renewal or extension. Sales of licensed products represented 52% and 50% of the Company’s gross sales in fiscal years2026 and2025, respectively, which included 23% and 21% of gross sales in fiscal years2026 and2025, respectively, under the Company’s license agreements with affiliated companies of The Walt Disney Company (“Disney”). The Company’s license agreement with Disney expires* December 31, 2027*and covers infant and toddler bedding, diaper bags, infant feeding and bath in the United States and Canada, and bibs and disposable products in the United States, Canada and Japan.

Customers:The Company’s customers consist principally of mass merchants, large chain stores, mid-tier retailers, juvenile specialty stores, value channel stores, grocery and drug stores, restaurants, internet accounts and wholesale clubs. The Company doesnot enter into long-term or other purchase agreements with its customers.** The table below sets forth those customers that represented more than10% of the Company’s gross sales during the fiscal years ended March 29, 2026and March 30, 2025.

Note5 – Inventories

As of* March 29, 2026and March 30, 2025,*the Company’s balances of inventory were $28.4 million and $27.8 million, respectively, nearly all of which were finished goods.

Note6 – Financing Arrangements

*Factoring Agreements:*To reduce its exposure to credit losses, the Company assigns the majority of its trade accounts receivable to CIT, a subsidiary of First Citizens Bank, pursuant to factoring agreements, which have expiration dates that are coterminous with that of the financing agreement described below. Under the terms of the factoring agreements, CIT remits customer payments to the Company as such payments are received by CIT. As such, the Company doesnot take advances on the factoring agreements.

F-12

CIT bears credit losses with respect to assigned accounts receivable from approved shipments, while the Company bears the responsibility for adjustments from customers related to returns, allowances, claims and discounts. CIT* mayat any time terminate or limit its approval of shipments to a particular customer. If such a termination or limitation occurs, then the Company either assumes (and mayseek to mitigate) the credit risk for shipments to the customer after the date of such termination or limitation or discontinues shipments to the customer. Factoring fees, which are included in marketing and administrative expenses in the consolidated statements of operations, were $335 thousand and $386 thousand during the fiscal years ended March 29, 2026and March 30, 2025,*respectively.

Credit Facility:The Company’s credit facility includes a revolving line of credit and a term loan of $8.0 million under a financing agreement with CIT. The Company mayborrow up to $40.0 million under the revolving line of credit, which includes a $1.5 million sub-limit for letters of credit, bearing interest at prime minus 0.5% or the Secured Overnight Financing Rate (“SOFR”) plus 1.6%, and is secured by afirst lien on all assets of the Company. The financing agreement for the revolving line of credit matures on* July 19, 2029.At March 29, 2026,*the Company had elected to pay interest on balances owed under the revolving line of credit, if any, under the SOFR option, which was 5.3%. The financing agreement also provides for the payment by CIT to the Company of interest at prime as of the beginning of the calendar month minus 2.0% on daily negative balances, if any, held at CIT.

At* March 29, 2026and March 30, 2025,*the balances on the revolving line of credit were $9.5 million and $11.9 million, respectively, there wasno letter of credit outstanding and $12.5 million and $13.8 million, respectively, was available under the revolving line of credit based on the Company’s eligible accounts receivable and inventory balances. The financing agreement contains usual and customary covenants for agreements of that type, including limitations on other indebtedness, liens, transfers of assets, investments and acquisitions, merger or consolidation transactions, transactions with affiliates, and changes in or amendments to the organizational documents for the Company and its subsidiaries.

On* January 2, 2025,the Company and its subsidiaries entered into a letter agreement with CIT with respect to the financing agreement, pursuant to which CIT waived the Company’s non-compliance with the fixed charge coverage ratio required under the financing agreement with respect to the Company’s fiscal quarters ended September 29, 2024and December 29, 2024.In addition, the letter agreement modified the financing agreement by changing the Excess Availability (as defined in the agreement) to $7,000,000 (from50%* of the outstanding balance of the Company’s term loan under the financing agreement).

On* February 10, 2025,the Company and CIT amended the Company’s financing agreement with CIT to: (i) waive, with respect to the fiscal year ending March 30, 2025,and through the fiscal year ending March 29, 2026,the Company’s obligation to comply with the fixed charge coverage ratio; and (ii) increase the Excess Availability required to be maintained by the Company with respect to its revolving line of credit under the financing agreement from $7,000,000 to $7,500,000, until further notice to the Company by CIT. After such notice, the Excess Availability required to be maintained by the Company shall be50%* of the outstanding balance of the Company’s term loan under the financing agreement.

On* June 23, 2025,the Company and CIT further amended the Company’s financing agreement with CIT to: (i) provide that, until the Company’s term loan is paid in full, the Company shall maintain at all times Excess Availability equal to or the greater of (a) the sum of the balance outstanding under the Company’s term loan plus $1.0 million or (b) $4.0 million (the “Availability Covenant”); and (ii) reinstate the fixed charge coverage ratio; provided however, that the fixed charge coverage ratio shallnot* be tested at any fiscal quarter end in which, during the immediately preceding fiscal quarter, the Company at all times has been in compliance with the Availability Covenant. As of* March 29, 2026,*the Company was in compliance with the Excess Availability requirements.

The balance on the $8.0 million term loan as of* March 29, 2026was $4.7 million, including $2.0 million classified as current. The term loan was issued July 19, 2024,is payable by the Company in 48 equal monthly installments and bears interest at SOFR plus 2.25% (5.9% at March 29, 2026).*

Credit Concentration: The Company’s accounts receivable at* March 29, 2026amounted to $18.9 million, net of allowances of $1.5 million. Of this amount, $16.3 million was due from CIT under the factoring agreements, which represents the maximum loss that the Company could incur if CIT failed completely to perform its obligations under the factoring agreements. The Company’s accounts receivable at March 30, 2025*amounted to $24.5 million, net of allowances of $1.7 million. Of this amount, $21.9 million was due from CIT under the factoring agreements, which represented the maximum loss that the Company could have incurred if CIT had failed completely to perform its obligations under the factoring agreements.

F-13

Fair Value: The Company evaluates the fair value of its debt using thethree level fair value hierarchy. Fair value should be based on the assumptions market participants would use when pricing the liability and establishes a fair value hierarchy that prioritizes the inputs used to develop those assumptions and measure fair value. The hierarchy requires companies to maximize the use of observable inputs and minimize the use of unobservable inputs. Thethree levels of inputs in the fair value hierarchy are as follows:

The carrying value of financial instruments reported in the accompanying condensed consolidated balance sheets for cash, which is considered Level1, accounts receivable, accounts payable, accrued expenses and other liabilities, which are all considered Level2, approximate fair value due to the immediate or short-term nature of these financial instruments.

The following table presents fair value of the debt as of* March 29, 2026:*

The Company uses a valuation model to determine the fair value of its revolving line of credit and the term loan with CIT. The Company uses a discounted cash flow model to project the future principal and interest payments over the remaining life of the loans. The significant inputs used in the model are observable market data including SOFR Forward Curves.

The aggregate maturities of long-term debt for each of thefive years subsequent to* March 29, 2026are: $2 million in2027,* $2.2 million in2028, $500 thousand in2029, $9.5 million in2030 and $0 in2031.

Note7 – Goodwill, Customer Relationships and Other Intangible Assets

Goodwill: Goodwill represents the excess of the purchase price over the fair value of net identifiable assets acquired in business combinations. For the purpose of presenting and measuring for impairment of goodwill, the Company hastwo reporting units:one that produces and markets bedding and diaper bags and another that produces and markets bibs, toys and disposable products. The Company measures for impairment annually as of thefirst day of the Company’s fiscal year. For the fiscal year ended* March 30, 2025,*the Company determined that a triggering event occurred in relation to the depressed market price of the Company’s common stock and corresponding significant decline in the Company’s market capitalization. As a result, the Company performed a quantitative goodwill impairment test.

The fair value of goodwill in each impairment test was determined using a combination of an income approach, which estimates fair value based upon projections of future revenues, expenses, and cash flows discounted to their respective present values, and a market approach. The valuation methodology and underlying financial information included in the Company’s determination of fair value required significant judgments by management. The principal assumptions used in the Company’s discounted cash flow analysis consisted of (a) long-term projections of financial performance and (b) the weighted-average cost of capital of market participants, adjusted for the risk attributable to the Company and the industry in which it operates. Under the market approach, the principal assumption included an estimate of a control premium.

F-14

Based on the goodwill impairment analysis performed, the Company determined that the estimated fair values of its reporting units were lower than their carrying value, indicating that the goodwill within these reporting units had been impaired. Consequently, the Company recorded a non-cash goodwill impairment charge of $13.8 million during the year ended* March 30, 2025.*The following table presents the carrying amounts of goodwill (in thousands):

Other Intangible Assets: Other intangible assets as of* March 29, 2026and March 30, 2025consisted primarily of the fair value of identifiable assets acquired in business combinations other than tangible assets and goodwill. The gross amount and accumulated amortization of the Company’s other intangible assets as of March 29, 2026and March 30, 2025,the amortization expense for the fiscal years ended March 29, 2026and March 30, 2026,*the entirety of which has been included in marketing and administrative expenses in the accompanying consolidated statements of operations, are as follows (in thousands):

Amortization expense, which is included in marketing and administrative expenses in the accompanying consolidated statements of operations, amounted to $775 thousand and $772 thousand for the years ended* March 29, 2026and March 30, 2025,respectively. The Company estimates that its amortization expense will be $747 thousand, $701 thousand, $563 thousand, $563 thousand and $563 thousand in fiscal years2027,* 2028, 2029, 2030 and2031, respectively.

Note8 – Acquisition

On* July 19, 2024 (*the “Closing Date”), NoJo acquired substantially all of the assets, and assumed certain specified liabilities, of Baby Boom Consumer Products, Inc. (“Baby Boom”)(the “Acquisition”), for a purchase price of $18.0 million in cash, subject to a working capital adjustment. The Acquisition was funded by the Company using the proceeds of an $8.0 million term loan from CIT and additional borrowings under the Company’s revolving line of credit with CIT.

The Acquisition has been accounted for in accordance with FASB ASC Topic805, Business Combinations. The identifiable assets acquired were recorded at their estimated fair value, which has been determined based on available information and the use of multiple valuation approaches. The estimated useful lives of the identifiable intangible assets acquired were determined based upon the remaining time that these assets are expected to directly or indirectly contribute to the future cash flow of the Company. On* December 23, 2025,the Company received $2.5 million in proceeds from certain claims filed by the Company under a representations and warranties insurance policy purchased in connection with the Acquisition (the “Insurance Proceeds”). The Insurance Proceeds are recorded within other income in the accompanying consolidated statements of operations for the year ended March 29, 2026.The Company considers the measurement period to have ended as of June 25, 2025*and further considers all measurement period adjustments to be final.

F-15

The acquisition cost paid on the Closing Date amounted to $16.3 million, which included net working capital adjustment. The following table represents the Company’s allocation of the acquisition cost (in thousands) to the identifiable assets acquired and the liabilities assumed based on their respective estimated fair values as of the Closing Date. The excess of the acquisition cost over the estimated fair value of the identifiable net assets acquired is reflected as goodwill.

Based on the allocation of the acquisition cost, the Company recognized $5.3 million of goodwill as of the Closing Date, the entirety of which was assigned to the reporting unit of the Company that produces and markets infant and toddler bedding and diaper bags. The goodwill recognized primarily consists of synergies expected from combining operations of Baby Boom and the Company and intangible assets acquired that donot qualify for separate recognition. The following table represents adjustments made to the amount of goodwill during the fiscal year ended* March 30, 2025 (*in thousands):

Goodwill is expected to be deductible for income tax purposes, net of the effects of the adjustments outlined in the table above and the Insurance Proceeds.

The assets acquired in the Acquisition generated net sales of $11.9 million of bedding and diaper bag products for the period from the Closing Date to* March 30, 2025.The Company is unable to reasonably estimate Baby Boom earnings from the Closing Date to March 30, 2025after making every reasonable effort to do so. Amortization expense associated with the acquired amortizable intangible assets was $352 thousand and $234 thousand during the fiscal years ended March 29, 2026and March 30, 2025,*respectively, which is included in marketing and administrative expenses in the accompanying consolidated statements of operations. Amortization is computed using the straight-line method over the estimated useful lives of the assets, which are 15 years for the tradename,14 years for the licensing relationships and 14 years on a weighted-average basis for the grouping taken together.

The Company has determined, on a pro forma basis, that the combined net sales and the combined net loss of the Company and Baby Boom, giving effect to the Acquisition as if it had been completed on* April 3, 2023,would have been $92.3 million and $8.6 million, respectively, (unaudited) for the fiscal year ended March 30, 2025.The combined net income includes adjustments related to the amortization of the amortizable intangible assets acquired and estimates of the interest expense and income tax expense or benefit that would have been incurred, but otherwise donot* reflect the costs of any integration activities or benefits that* mayresult from the realization of future cost savings from operating efficiencies, or any revenue, tax or other synergies that may*result from the Acquisition.

F-16

Note9 – Leases

During the fiscal years ended* March 29, 2026and March 30, 2025,the Company capitalized operating lease obligations as right of use assets and recognized corresponding lease liabilities in the amount of $641 thousand and $999 thousand. The Company made cash payments related to its recognized operating leases of $4.7 million and $4.5 million during the fiscal years ended March 29, 2026and March 30, 2025,respectively. Such payments reduced the operating lease liabilities and were included in the cash flows provided by operating activities in the accompanying consolidated statements of cash flows. The Company recognized noncash reductions to its operating right of use assets resulting from reductions to its lease liabilities in the amount of $876 thousand during the fiscal year ended March 30, 2025.As of March 29, 2026and March 30, 2025,*the Company’s operating leases had weighted-average discount rates of 6.1% and 6.0%, respectively, and weighted-average remaining lease terms of 2.4 years and 3.2 years, respectively.

During the fiscal years ended* March 29, 2026and March 30, 2025,*the Company classified its operating lease costs within the accompanying consolidated statements of operations as follows (in thousands):

The maturities of the Company’s operating lease liabilities as of* March 29, 2026*by fiscal year are as follows (in thousands):

Note10 – Stock-based Compensation

The Company hastwo incentive stock plans, the2014 Omnibus Equity Compensation Plan (the*“2014* Plan”) and the2021 Incentive Plan (the*“2021* Plan”). As a result of the approval of the2021 Plan by the Company’s stockholders at the Company’s2021 annual meeting of stockholders, grants* may**no* longer be issued under the2014 Plan.

The Company believes that awards of long-term, equity-based incentive compensation will attract and retain directors, officers and employees of the Company and will encourage these individuals to contribute to the successful performance of the Company, which will lead to the achievement of the Company’s overall goal of increasing stockholder value. Awards granted under the2021 Plan* maybe in the form of incentive stock options, non-qualified stock options, shares of restricted or unrestricted stock, stock units, stock appreciation rights, or other stock-based awards. Awards maybe granted subject to the achievement of performance goals or other conditions, and certain awards maybe payable in stock or cash, or a combination of the two. The2021* Plan is administered by the Compensation Committee of the Board, which selects eligible employees, non-employee directors and other individuals to participate in the2021 Plan and determines the type, amount, duration (such durationnot to exceed a term often (10) years for grants of stock options) and other terms of individual awards. At* March 29, 2026,125,504 shares of the Company’s common stock were available for future issuance under the2021* Plan, which* may*be issued from authorized and unissued shares of the Company’s common stock or treasury shares.

Stock-based compensation is calculated according to FASB ASC Topic718, Compensation–* Stock Compensation*, which requires stock-based compensation to be accounted for using a fair-value-based measurement. During fiscal years2026 and2025, the Company recorded $766 thousand and $752 thousand of stock-based compensation, respectively. The Company records the compensation expense associated with stock-based awards granted to individuals in the same expense classifications as the cash compensation paid to those same individuals. All stock awards are expensed over the vesting period and are adjusted for forfeitures as occurred.

F-17

Stock Options:The following table represents stock option activity for fiscal years2026 and2025:

At* March 29, 2026,there wasno intrinsic value of both the outstanding and exercisable stock options. There wereno stock options exercised during the fiscal years ended March 29, 2026,and March 30, 2025.As of March 30, 2025,*there wasno intrinsic value of both the outstanding and exercisable options.

To determine the estimated fair value of stock options granted, the Company uses the Black-Scholes-Merton valuation formula, which is a closed-form model that uses an equation to estimate fair value. The following table sets forth the assumptions used to determine the fair value of the non-qualified stock options awarded to certain employees during fiscal year2025, which options vest over atwo-year period, assuming continued service.

For the fiscal year ended* March 29, 2026,the Company recognized $15 thousand as compensation expense associated with stock options with $8 thousand in cost of products sold and $7 thousand in marketing & administrative expenses. For the fiscal year ended March 30, 2025,*the Company recognized $39 thousand as compensation expense associated with stock options with $21 thousand in cost of products sold and $18 thousand in marketing & administrative expenses.

F-18

A summary of stock options outstanding and exercisable as of* March 29, 2026*is as follows:

As of* March 29, 2026,*total unrecognized stock-option compensation costs amounted to $3 thousand, which will be recognized as the underlying stock options vest over a weighted-average period of 3.0 months. The amount of future stock-option compensation expense could be affected by any future stock option grants and by the separation from the Company of any employee or director who has stock options that are unvested as of such individual’s separation date.

Time-Based Restricted Shares:The Company issues time-based restricted shares to the Board of Directors and certain officers and executives under our stock-based compensation plan. The time-based restricted shares automatically convert to shares of common stock on aone-for-one basis as the awards vest.* The time-based restricted shares typically vest over aone-to-three-year vesting period on the anniversary of the grant date. The grant date fair value is equal to the quoted market price for the shares on the date of the grant. The total fair value of time-based restricted shares vested during thetwelve* months ended* March 29, 2026and March 30, 2026was $410 thousand and $573 thousand, respectively. The following table summarizes the Company’s non-vested share activity for the years ended March 30, 2025and March 29, 2026:*

Performance Award Shares: On* March 1, 2022,performance awards were granted to certain of the Company’s executive officers, consisting of 187,500 shares, of which: (a)75,000 shares shall be earned if the closing price per share of the Company’s common stock equals or exceeds $8.00 onten trading days within any period oftwenty* consecutive trading days prior to* March 1, 2027;and (b)112,500 shares shall be earned if the closing price per share of the Company’s common stock equals or exceeds $9.00 onten trading days within any period oftwenty* consecutive trading days prior to* March 1, 2027.Upon the achievement of each applicable stock hurdle described above: (i)one-third of the shares that are earned shall vest on the later of the date on which the shares are earned and March 1, 2023; (ii)one-third of the shares that are earned shall vest on thefirst* anniversary of the date on which the shares are earned; and (iii)one-third shall vest on thesecond anniversary of the date on which the shares are earned. All shares that are non-earned or non-vested will be forfeited upon the termination of service. The Company, with the assistance of an independentthird party, determined that the grant date fair value of the awards amounted to $732 thousand. On* October 27, 2025,*62,500 of these performance award shares were forfeited.

For the fiscal years ended* March 29, 2026and March 30, 2025,*the Company recognized compensation expense associated with non-vested stock grants, which is included in marketing and administrative expenses, of $751 thousand and $713 thousand, respectively.

F-19

As of* March 29, 2026,*total unrecognized compensation expense related to the Company’s non-vested stock grants was $857 thousand, which will be recognized over the remaining portion of the respective vesting periods associated with each block of grants, such grants having a weighted average vesting term of 17.5 months.

In connection with the retirement of Craig J. Demarest as the Company’s Chief Financial Officer, Vice President and Secretary effective* June 30, 2025,the Compensation Committee of the Board accelerated the vesting of the restricted stock award, consisting of 25,000 shares of the Company’s common stock, granted to Mr. Demarest on March 26, 2024,pursuant to the2021* Plan (the “Award”). The Award was originally scheduled to vest in its entirety on* March 26, 2027 (from March 26, 2024,through March 26, 2027,the “Vesting Period”). The Award now will vest on the last day of Mr. Demarest’s employment with the Company (which is expected to be July 1, 2025)*as to a number of shares of the Company’s common stock equal to the product of (i)25,000, multiplied by (ii) a fraction, the numerator of which is the number of days Mr. Demarest was employed by the Company during the Vesting Period and the denominator of which is the number of calendar days in the Vesting Period. The unvested portion of the Award, as of the last day of Mr. Demarest’s employment with the Company, will be forfeited.

Note11 – Shareholders’** Equity**

Dividends: The holders of shares of the Company’s common stock are entitled to receive dividends when and as declared by the Board. Cash dividends of$0.32 per share were declared during each of the fiscal years ended* March 29, 2026and March 30, 2025,amounting to $3.4 million and $3.3 million, respectively. The Company’s financing agreement with CIT permits the payment by the Company of cash dividends on its common stock without limitation, provided there isno* default before or as a result of the payment of such dividends.

Stock Repurchases:The Company acquired treasury shares by way of the surrender to the Company shares of common stock from several employees to satisfy the income tax withholding obligations relating to the vesting of non-vested stock. In this manner, the Company acquired 3,000 treasury shares during the fiscal year ended March 29, 2026at a market value of $2.89 per share, and acquired 13,000 treasury shares during the fiscal year ended* March 30, 2025*at a weighted-average market value of $4.44 per share.

Note12 – Income Taxes

As disclosed in Note2, the Company adopted ASUNo. 2023-09 effective for the fiscal year ended* March 29, 2026.The ASU requires disaggregation of information contained in the disclosures related to the reconciliation of the U.S. federal statutory corporate income tax rate to the Company’s effective tax rate, which is summarized below for the fiscal year ended March 29, 2026 (*amounts in thousands):

F-20

In accordance with the guidance in effect prior to the adoption of ASUNo. 2023-09, the Company’s previously disclosed reconciliation of the U.S. federal statutory income tax rate to the Company’s effective tax rate for the fiscal year ended* March 30, 2025*is summarized below (amounts in thousands):

All income of the Company is earned domestically. The Company is required to pay foreign taxes to the Peoples Republic of China based strictly on the expenses incurred at the Company’s foreign representative offices in that country. The Company recognizes these foreign taxes paid as a component of the Company’s income tax provision.

The Company’s income tax provision for the fiscal years ended* March 29, 2026and March 30, 2025*is summarized below (in thousands):

F-21

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of* March 29, 2026and March 30, 2025*are as follows (in thousands):

In assessing the probability that the Company’s deferred tax assets will be realized, management of the Company has considered whether it is more likely thannot that some portion or all of the deferred tax assets willnot be realized. The ultimate realization of deferred tax assets is dependent upon the generation of taxable income during the future periods in which the temporary differences giving rise to the deferred tax assets will become deductible. The Company has also considered the scheduled inclusion into taxable income in future periods of the temporary differences giving rise to the Company’s deferred tax liabilities. The valuation allowance as of* March 29, 2026and March 30, 2025was related to state net operating loss carryforwards that the Company doesnot* expect to be realized. Based upon the Company’s expectations of the generation of sufficient taxable income during future periods, the Company believes that it is more likely thannot that the Company will realize its deferred tax assets, net of the valuation allowance and the deferred tax liabilities.

As disclosed in Note2, the Company adopted ASUNo. 2023-09 effective for the fiscal year ended* March 29, 2026.The ASU requires a disaggregation of income tax payments, which is summarized below for the fiscal year ended March 29, 2026 (*in thousands):

F-22

The following table sets forth the reconciliation of the beginning and ending amounts of unrecognized tax liabilities during the fiscal years ended* March 29, 2026and March 30, 2025 (*in thousands):

During fiscal years2026 and2025, the Company recorded discrete income tax charges of $160 thousand and $34 thousand, respectively, to reflect the effect of tax shortfalls arising from the expiration and forfeiture of stock options and performance share awards, as well as the vesting of non-vested stock during the periods. Income tax overpayments at* March 29, 2026and March 30, 2025*were $504 thousand and $76 thousand, respectively, and were recorded in other accounts receivable in the consolidated balance sheets.

Note13 – Retirement Plan

The Company sponsors a defined contribution retirement savings plan with a cash or deferred arrangement (the*“401*(k) Plan”), as provided by Section401(k) of the Internal Revenue Code (the “Code”). The401(k) Plan covers substantially all employees, who* mayelect to contribute a portion of their compensation to the401*(k) Plan, subject to maximum amounts and percentages as prescribed in the Code. Each calendar year, the Board determines the portion, if any, of employee contributions that will be matched by the Company.

For calendar years2026, 2025, and2024, the Board established the employer matching contributions at 100% of thefirst 2% of employee contributions and 50% of the next 3% of employee contributions to the401(k) Plan. If an employee separates from the Company prior to the full vesting of the funds in their account, then the unvested portion of the matching employer amount in their account is forfeited when the employee receives a distribution from their account. The Company utilizes such forfeitures as an offset to the aggregate matching contributions. The Company’s matching contributions to the401(k) Plan, net of the utilization of forfeitures, were $392 thousand and $359 thousand for the fiscal years ended* March 29, 2026and March 30, 2025,*respectively.

Note14 – Commitments and Contingencies

Royalty expense amounted to $6.5 million and $6.7 million during fiscal years2026 and2025, respectively. The Company’s commitment for the nextfive fiscal years for minimum guaranteed royalty payments under its license agreements as of* March 29, 2026is $9.2 million, consisting of $5.0 million, $3.6 million, $425 thousand, $59 thousand and $59 thousand due in fiscal years2027,* 2028, 2029, 2030 and2031, respectively.

The Company is, from time to time, involved in various legal proceedings relating to claims arising in the ordinary course of its business. Neither the Company nor any of its subsidiaries is a party to any such legal proceeding the outcome of which, individually or in the aggregate, is expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

F-23

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated: